Equity markets ended 2020 strongly despite global health concerns, a pandemic fueled recession and domestic elections marred by a violent transition. Despite the disconnect between economic indicators and capital markets, we successfully navigated market trends and capitalized on the post March selloff rebound. Our core belief in rebalancing, critical thinking and research led us to overweight Technology, Communications and Healthcare sectors after the first quarter decline.

We begin 2021 with a White House committed to enhanced vaccine production, distribution and additional stimulus to bridge the still growing economic gap posed by unemployed and underemployed workers. Although the equity markets continue to gain during early 2021, we continue to scrutinize our portfolio models to accommodate shifting themes and portfolio weightings. Long term, our goal is to provide stable returns through broad global diversification. Note that our risk profile did not change significantly last Spring; when we selectively added to non-fixed income sectors.

Market uncertainty is a certainty; we take this opportunity to discuss themes that we feel may dominate 2021’s investment climate.

Momentum, “growth equities” and low interest rates defined 2020 and drove the rebound in global capital markets. Certain momentum growth equites experienced triple digit gains – so much for “once in a hundred-year” results. Our fundamental analysis indicates that many companies are overvalued. For example, the euphoria experienced in non-fossil fuel transportation, cannabis and crypto-currency sectors have a tulip bulb bubble quality about them. Clearly, we believe there is a difference between life changing innovation and the price to invest in these trends.

Early 2021 portfolio rebalancing has focused on trimming exposure to domestic growth momentum and shifting toward global markets – specifically emerging markets; and modestly overweighting US value equities. US Dollar weakness and domestic equity outperformance portends for an increased exposure to international investments. We hope this will blunt the impact of any significant domestic correction and provide an inflation hedge if the dollar weakness continues. Shifting towards value – to take advantage of successful vaccine programs and additional stimulus resulting in a broader global economic recovery. Note that financial services tend to be the largest sector weightings in value indices and are poised to benefit from the recovery and higher interest rates. Technical analyses of the largest value/growth underperformance in history provides additional support for a reversionary correction toward value.

For 2021, it is important to consider the potential impact of rising interest rates on the economy and specific sectors dependent on cheap capital. The Biden stimulus plan is but one piece of a global monetary mosaic supporting the long-term trend towards higher interest rates. A vaccine program that results in a healthy and intentionally mobile work force, massive global stimulus and accommodative monetary policy should increase economic growth, inflation and therefore interest rates.

Rising interest rates is a key risk for long-term bond holders. One way to view this risk is by Duration – loosely defined as the way a bond’s price will change in response to changes in interest rates. Hopes for an effective vaccine program, pent up demand for durables (never thought a Home Depot rep would look me in the eye and quip “sorry we have no stoves”) and revitalized discretionary spending may provide the inflationary spike required to lift the long end of the yield curve. However, the fed has a very heavy thumb – at best we anticipate baby steps to purchase longer term securities.

We interpret the steepening yield curve and rising rate environment as a healthy adjustment and necessary as the economy recovers and normalizes. A rebounding global economy coinciding with interest rates close to zero invites inflation, which negatively impacts long-duration investment performance. To summarize, we continue to favor shorter term fixed income vehicles, but hope to take advantage of inflationary pressures and a steepening yield curve if and when returns revert closer to historic norms.

The pandemic has been devastating to parts of the real estate market. Traditional brick and mortar stores and office space, represent a large percentage of this sector. The pandemic has realigned (perhaps permanently) the office space requirements for a typical business. Working from home may become the new normal for many people. We believe that real estate opportunities should focus on international logistic centers, supply chain and data/communication centers. The weakening dollar, has made investments in foreign real estate more attractive; foreign REITs are represented within our diversified portfolio.

Part of 2020’s success and continued optimism for 2021 hinges on alternatives, specifically precious metals. Gold and silver traditionally provide a hedge against an equity correction and inflation. We are considering cryptocurrencies and their attendant technology to further protect our investors from market volatility. We are also maintaining slightly higher than normal cash positions to dampen volatility.

5C continues to encourage broad diversification and targeted portfolio rebalancing to maintain exposure to sector allocations, cushion against volatility and outsized corrections, while maintaining your long-term strategy.

We appreciate your trust and confidence in our management. Please do not hesitate to contact us to discuss your portfolio discuss changes and updates on your financial situation.




Michael R. Sanders

Principal, Chief Investment Officer





Craig R. Marson, JD, CPA

Principal, Director of Financial Planning



Michael Sanders, our Chief Investment Officer, discusses how we construct resilient portfolios for our clients, constantly monitor changes in financial markets and make adjustments.

Watch the videos now.

“What’s working and what’s not” Michael Sanders, our Chief Investment Officer, discusses the performance of different sectors amidst this year’s volatility.

Preview the discussion and video now


Michael Sanders, our Chief Investment Officer, discusses the rebound and trends in the U.S. Housing Market.

Preview the discussion and video now


Dear Clients, Friends and Associates,
Over the last several months, society has been confronted with a global health crisis seemingly pulled from a science fiction novel. Despite this, we are confident that our combined strength and resilience will meet and overcome the immediate challenge and better prepare us for future crises.
Our investment and planning approaches seek to blunt the effects of severe dislocation regardless of the catalyst and take advantage of oversold markets that often accompany a crisis. We share your emotional tumult but employ investment risk/reward guidelines, which we believe will limit overreacting as the equity markets tests statistical limits.
We believe that now is not the time to sit idly, but to take calculated action and add value. We are continually updating our analytics regarding asset allocation and risk assessment. Rebalancing, opportunistic tax-loss swaps, and other forms of ongoing portfolio management are essential.
Recently, it appears that capital markets have begun a stabilization process characterized by more orderly price discovery. Several indicators and actions are supporting the capital markets:
  • Historical extremes in the fear gauge as measured by the VIX (volatility measure) which has led to panic selling;
  • The panic selling caused a near-term liquidity crunch resulting in oversold safer havens such as municipal bonds and high-quality corporates – repriced high-quality municipals are providing gross returns in excess of Treasuries;
  • Swift and bold action on the part of the Federal Reserve and the Treasury to restore liquidity and ensure orderly functioning of markets;
  • By weeks end we anticipate the enactment of legislation providing broad fiscal stimulus that should greatly aid individuals and corporations to bridge the economic stress affecting virtually everyone;
  • To the extent possible, emergency response systems are ramping up additional capacity to hopefully meet demand for treatment;
  • Certain Asian economies are returning to work, providing useful data relating to the time required to control and recover from widespread exposure. We are not dismissing the chance of a global relapse, but are hopeful that countries initially affected will act strongly to stave off a second wave of infection;
  • During this week, long-term investors are finding significant pricing value from the end of February;
  • Liquidity levels in fixed income markets have stabilized and as noted before provide strong relative value in certain sectors.

We seek to rebalance portfolios back to target equity weights, with emphasis on sectors such as Technology, Healthcare, and Communications, which we believe will provide resiliency through the crisis and also offer long-term value. This secular thematic approach will drive growth as the economy recovers.

The global decline in equity markets (approximately 30%), presents a relatively uncommon opportunity to selectively add risk.
We are mindful that the markets do not alert investors by ringing an “all clear” bell at the bottom of a cycle. Although greater than normal volatility is expected near term, we feel strongly the risk premiums have reached levels that long term, disciplined investors will be very happily rewarded.
Please do not hesitate to contact us at any time with questions and specific issues.
With a deep sense of responsibility,

From your 5C Advisory Team.

Clearly the world is closely following the trajectory of the coronavirus outbreak.  Uncertainty is global and as citizens we are unsettled, which is manifesting itself in the investment markets.

Fundamentally, markets dislike uncertainty, processing information in real-time whether positive or negative, leading to increased volatility.  When markets move rapidly downward, our experience shows us that the associated stress tends to be greater than the positive feelings one generally experiences during a rising market.  Our client portfolios are designed to moderate the risk associated with current events, provide liquidity and position you to be opportunistic.

Market declines can occur when investors are forced to reassess expectations for the future.  The outbreak’s expansion is causing worry amongst governments, corporations and individuals about the near and longer term impact on the global economy.  Apple announced earlier this month that it expected revenue to take a hit from problems making and selling products in China1.  Australia’s prime minister has said the virus will likely become a global pandemic2, and other officials there warned of a serious blow to the country’s economy3.  Airlines are preparing for the toll it will take on travel4.  These are just a few examples of how the impact of the coronavirus is being assessed.

The market is responding to new information in real time and is attempting to price in unknown factors.  As risk increases during a time of heightened uncertainty, so do the returns investors demand for bearing that risk, which initially pushes prices lower.  When approaching the market from a long-term, unemotional, and disciplined perspective this relationship between risk and reward is core to our investment philosophy.  This helps us to make prudent investment decisions for our clients no matter the circumstances.

We can’t state with confidence when this crisis will moderate and hopefully end.  However, our expectation is that those bearing today’s risk will be compensated with positive expected returns.  We need only reference lessons learned from past health crises, such as the Ebola and swine-flu outbreaks earlier this century, and of market disruptions, such as the global financial crisis of 2008–2009.  Further, history has shown no reliable way to identify a market peak or bottom, supporting our belief against making market moves based on fear or speculation, even as difficult and traumatic events transpire.

Amid the anxiety that accompanies developments surrounding the coronavirus, decades of financial science and long-term investing principles remain a strong guide.  If you have specific portfolio questions, liquidity or changing financial needs please call us to discuss.

From your 5C Advisory Team.

This report features world capital market performance and a timeline of events for the past 4 months.

The report also illustrates the impact of globally diversified portfolios and features timely topics.

This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets.

The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.